Tuesday, May 3, 2016

Captain Obvious: Yes, the 10% UUT is a CalPERS Tax (And Why That Should Really Tick You Off)

If you’re at a Las Vegas blackjack table, losing hand after hand and running out of money (budget reserves), which one of these choices should you choose:

1.    Keep playing and spending more money hoping that you’ll win or at least break even, or

2.     Walk away from the game and do something different.

The game that we’ve been losing as Sierra Madre taxpayers is paying for CalPERS as the pension plan for all our city employees. Or as we call CalPERS pensions on The Tattler, Platinum Pensions.

Why do we call them Platinum Pensions? Well, let’s go to the current issue of CalPERS Facts at a Glance (link) for the info.

In this screenshot, please note that the average years of service, all service retirees. That is 20.4 years.

Let’s see, if you started at age 22 and worked the average 20.4 years, you’d be 42.4 years old. According the CalPERS site and I quote: “The minimum retirement age for service retirement for most members is 50 years with five years of service credit. You could start another job at 43, start your CalPERS pension at 50, and also collect your 401(k) retirement from 1 or 2 more jobs!

But wait, there’s more!
You know those poor fools that work in the private sector? When their 401(k) doesn’t grow fast enough, or loses money, they get less of a retirement check. But not the CalPERS Sierra Madre employee. Down markets mean never having to say you’re sorry. Why is that? Because CalPERS assumes it makes 7.5% a year on your money. Even when it really doesn’t. Check out the returns for 2015.


In the real world, CalPERS had a net rate of return for the fiscal year ending 6/30/2015 of 2.4%. For the calendar year ending 12/31/2015 they lost 0.1%

Losing money? No problem for Sierra Madre employees. CalPERS will just bill the City, um, taxpayers, for the shortfall. The sky’s the limit. Now how much would you pay?

But CalPERS isn’t done. There’s also the problem of the current shortfall in the fund:

A pension plan is considered fully funded at 80% . The other 20% ideally will come from growth of investments since not everyone retires at the same time.

CalPERS is funded at a sorry 76.3% for 2014. Heck, in 2010 they were at 65.4%.

So What Can Sierra Madre Do?
We know that CalPERS has been killing Sierra Madre (among other cities) by continually raising the city’s CalPERS assessment each year.

This will get even worse when they give the SMPD a fat raise in the upcoming contract (along with their shiny new badges.)

Your City Council can stop CalPERS from robbing us. All they need to do is sign the contract to make the Los Angeles Sheriff’s Department (LASD) our full time police force. You know, besides the 6PM to 6AM protection they provide already.

What this means:

1. Sierra Madre’s CalPERS assessment would start to decrease each year because we’d no longer be paying for the SMPD.

2. We would benefit from a larger, better trained department with way more depth in vacation & sick coverage. Vacancies would NEVER be a problem.

3. The deputies would have their pensions through Los Angeles County Employees Retirement Association (LACERA). As of 2014, LACERA is 79.5% funded.

Is LACERA as good as CalPERS? Is it good enough for the men and women who protect us from the bad guys? It should be. It’s good enough for the retirement plans for:

1. Past Sierra Madre Mayor Nancy Walsh

2. Dr. Janice Nelson, the spouse of past Mayor Doug Hayes, and

3.     Past Mayor (and current LA County employee) John Harabedian, Jr.

Right?

sierramadretattler.blogspot.com

27 comments:

  1. So Councilmembers Capoccia, Harabedian, Goss, Delmar & Arizmendi told us we needed a 10% UUT FOREVER to save the SMPD?

    Looks more like it's to save CalPERS and the SMPD cops' Platinum Pensions.

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    Replies
    1. Yes but that's only temporarily. In a short time they are going to need MORE funding as the CaLPERS get a raise.
      The NO informed voting residents of Sierra Madre make me sick. They see a series of slick flashy mailers and HAVE to have THEIR police Department! (moan) Just wait until they receive their summer water bill with the new rates and increased UUT! Then they will be moaning about their high water bill and wondering what happened!

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    2. But the 10% UUT will help fix the water pipes! Yes on Measure UUT said so.

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    3. what would be interesting to read is who is currently retired from SM and collecting a pension, how much and who will be retiring in the next 10 years and what each will cost us and what we (SM) is paying to Calpers because it's a giant taxpayer funded ponzi scheme

      the UUT might have failed if the voter understood that despite all the lies, misdirection and misrepresentation of the UUT, the biggest non essential debt facing the city is the pension debt

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    4. I know a fireman from another city. He wasn't a front line guy but never the less, he was a fireman which today has a "protected" politically correct status of untouchable, same with police officers who choose the line of work and we are thankful.

      For 25 years, he worked and towards the end he figured out the public pension system and milked his overtime, saving every dime for his "retirement".

      Within a month of his retirement, because he had a enormous taxpayer funded monthly paycheck, he took his "savings" and in cash, bought a Porsche, a boat and spruced up his beach house. He didn't have to worry about an income for the rest of his life because the taxpayers were paying him and he could take a 2nd job for fun and double his income



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  2. If Obama and copocca has there way. Obama will ruin the economy on his way out of office and so will coppocca. Bill Clinton molested the white house women and Hillary stole the federal airlooms. Obama had 8 years livining on my dine, now I will be giving the Donald my vote. Taxation and overspending can not continue, some where it must stop,!

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  3. Those slick mailers that promised to fix all the cities woos from A to Z are nothing but bunko political promises not redeemable outside ear shot of the nearest liars club meeting aka; city council meeting or anything alike it. Voters your on your own because thy city council now OWNS you for passing the latest 'forever UUT tax.' We deep in city hall thank you, now get out your wallets and empty them in the donation cup for city halls wasteful spending practices.

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    Replies
    1. True. But people fell for it hook, line and sinker. If they're that stupid maybe they deserve what they get.

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    2. 8:15 are you a Trump voter? Just wondering.

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    3. Agreed,
      It is going to take a train wreak to get the attention of the disinterested voter in Sierra Madre. Or some more effective way of the Tattler message reaching the apathetic residents.

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    4. 8:31 - I probably won't vote in November. Thank you for asking.

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    5. I'm going to vote. Staying at home is never an option for me.

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    6. Why encourage them? Bad plays close because of a lack of attendance. This show needs to be given the same kick in the butt.

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  4. Is it just me, or if you average those returns over 10 years, it's the equivalent of making 8% a year?

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    Replies
    1. Don't know if your figures are correct, but here's a good question:

      If CalPERS were successfully investing to get the assumed 7.75% return, whay do they keep increasing Sierra Madre's assessment every year. Even when the total number of employees has slightly decreased and no pay raises (other than step increases) have happened?

      I'm guessing CalPERS is really even more underfunded than estimated.

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    2. have you seen the office buildings Calpers built for itself?

      it's a ponzi scheme at taxpayer expense and SM has a huge problem on our hands and it's gonna get worse

      why? so public employees, especially those getting paid ridiculous salaries for mundane simple work, retire and live extremely comfortable at taxpayer expense forever

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  5. As Warren Buffet and I always say "running a minimal deficit is a good thing for business"

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  6. Win some, lose some. Don't give up hope. Who would have thought April could win in Arcadia.

    ReplyDelete
    Replies
    1. It is cyclical. These things change.

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  7. If I had known that I could get money like this for clerical work, I would have reconsidered my career in the private sector.

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    Replies
    1. It is very non-Darwinian. The least productive members of the herd are given the best rewards.

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  8. Sierra Madre is now riper than ever for the pickin'. For the past two days I have seen a white sedan with big blue lettering "World Peace Realty" and just found them on the internet with a Malibu address. Get out your Sierra Madre map and compass to draw circles to designate 300 ft distances from 22 W. Carter and pin point all the potential areas for more group homes, rehab centers across town.

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  9. The intent of the pension has been changed and abused by the oligarchy that receive the pensions.

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  10. the intent of the pension has been changed from keeping good employees from austerity in old age, to allowing an entire 2nd lifetime, lived on a pension.

    this was never the intent of pensions. the oligarchy (the recipients of the pensions) have serupticiously changed the system. transparency will change this situation fast, as there is not nearly enough money to support all this.

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  11. 80% is not full funding. That means there is only 80% of the money needed to meet the already committed payouts. And by the way, CalPERS assumes that 7.75% rate will be earned long into the future so the funded level is actually much lower.

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  12. Kris is correct, the actuarial rate is more like 5%. Please be aware that when a city files BK, property values decline overnight 40% and neighboring town home values decline 25% - 35%. There goes the local school district revenues and so goes schools.
    Keep partying on........

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  13. As Kris Hunt mentions above, 100% is fully funded. The fundedness ratio is a present value calculation, which means that it is assuming those future returns already. No, that 20% is not made up by investments hitting their target... it can fill that gap only by outperforming that target by quite a bit.

    And that hasn't been happening.

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